A mere 2% of FTSE 350 companies have a dedicated digital or technology representative on their Board, finds a new report. In light of the growing importance of technology to business strategy, and at a time when digitisation is driving commercial and societal change, the report’s authors stress, among others, the importance of recruiting and/or promoting more tech talent into boardrooms.
The research, conducted by Russam GMS, an interim management and executive search consultancy, looked at the boards of FTSE 350 companies and found that just eight (2%) include a dedicated digital or technology specialist, such as a Chief Information Officer (CIO) or Chief Technology Officer (CTO). They include PayPoint, the payment technologies firm, mining and metals giant BHP Billiton, and financial services company Hargreaves Lansdown. “These are startling statistics. Many FTSE 350 companies will have a Chief Information or Technology Officer somewhere in their ranks, but the fact that only a handful have one on the board begs all sorts of questions about the ability of businesses to drive effective and lasting technological change”, says Cathy Kay, Director at Russam GMS.
A comparison of the number of tech Board members between large and smaller FTSE 350 companies reveals that the larger players perform significantly better, at 5%, compared to 1.2% at their smaller peers.
Given the rise of technology as a key pillar and enabler of business strategies – from the realms of innovation to human resources, and across industries, from financial services to manufacturing – the report highlights that, across the board, tech CxO’s should eventually become as common on Boards as, say, Chief Financial Officers. “Technology is a company-wide issue, like finance or HR, and treating it as such is becoming increasingly urgent”, explains Kay.
An analysis of the FTSE 350 database also found that 125 companies of the group have an executive with declared technology background or experience. “But this still only constitutes 36%”, continues Kay. “The most significant changes driven by technology are yet to come. It’s the mantra boards have to live and make decisions by – or else risk missing out as the world transforms around them”, comment Kay.
A further finding of the study is that embracing technological advancements can boost both the efficiency as well as productivity of companies. Yet despite the massive benefits that are waiting to be reaped, realising the potential is by no means an easy task. Recent research from GenPact for instance showed that on average two thirds of digital transformation projects at large companies fail, and globally progressing towards becoming a ‘technology leader’ is notoriously hard – around 80% of firms face a lagging digital transformation maturity, found Arthur D. Little in a report released late last year.
Kay acknowledges that appointing a CTO on the board, or bolstering the share of tech executives in an organisation’s upper ranks, is only a small part of the equation. For these individuals to make a difference, she says the board has to buy-in to technological change and set a vision that permeates down into the wider organisational culture. “The greatest ideas in the world mean nothing without the vision and will to apply them. A business cannot just appoint a CTO or CIO and give him or her a budget and a mandate to get on with it; the board and the wider company have to be ready to accept them.” Successfully embedding digital transformation also requires a new way of working.
For companies that are seeking to diversify the make-up of their Boards and improve their track record in the area of technological change, Russam GMS has drafted five key recommendations:
1. Appoint a CTO to the board who can drive the technology strategy
2. Appoint an interim change manager who can help guide the company and work closely with the CTO
3. Build a pipeline of tech talent and establish recruitment criteria to match business requirements
4. Establish a digital transformation committee to help rationalise, define and design a technology strategy
5. Run innovation workshops for the board, to educate and enthuse board members